UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-02383
AllianceBernstein Bond Fund, Inc.
(Exact name of registrant as specified in charter)
1345 Avenue of the Americas, New York, New York 10105
(Address of principal executive offices) (Zip code)
Mark R. Manley
Alliance Capital Management, L.P.
1345 Avenue of the Americas
New York, New York 10105
(Name and address of agent for service)
Registrant's telephone number, including area code: (800) 221-5672
Date of fiscal year end: September 30, 2004
Date of reporting period: March 31, 2004
ITEM 1. REPORTS TO STOCKHOLDERS.
[LOGO] AllianceBernstein(SM)
Investment Research and Management
AllianceBernstein Bond Fund
Corporate Bond Portfolio
Semi-Annual Report--March 31, 2004
Investment Products Offered
=======================================
o Are Not FDIC Insured
o May Lose Value
o Are Not Bank Guaranteed
=======================================
The investment return and principal value of an investment in the Fund will
fluctuate as the prices of the individual securities in which it invests
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Fund carefully before investing. For a free copy of
the Fund's prospectus, which contains this and other information, visit our web
site at www.alliancebernstein.com or call your financial advisor or Alliance at
(800) 227-4618. Please read the prospectus carefully before you invest.
You may obtain performance information current to the most recent month-end by
visiting www.alliancebernstein.com (click on Investors/ Products & Services/
Mutual Funds).
This shareholder report must be preceded or accompanied by the Fund's prospectus
for individuals who are not current shareholders of the Fund.
You may obtain a description of the Fund's proxy voting policies and procedures,
without charge, upon request by visiting Alliance Capital's web site at
www.alliancebernstein.com (click on Investors, then the "proxy voting policies
and procedures" link on the left side of the page), or by going to the
Securities and Exchange Commission's web site at www.sec.gov, or by calling
Alliance Capital at (800) 227-4618.
AllianceBernstein Investment Research and Management, Inc., is an affiliate of
Alliance Capital Management L.P., the manager of the funds, and is a member of
the NASD.
May 15, 2004
Semi-Annual Report
This report provides management's discussion of fund performance for
AllianceBernstein Bond Fund Corporate Bond Portfolio (the "Portfolio") for the
semi-annual reporting period ended March 31, 2004.
Investment Objectives and Policies
The primary objective of this open-end fund is to maximize income over the
long-term, to the extent consistent with providing reasonable safety in the
value of each shareholder's investment. As a secondary objective, the Portfolio
seeks capital appreciation. To achieve its objectives, the Portfolio invests
primarily in corporate bonds. The Portfolio may also hold debt securities issued
by the U.S. and foreign governments. While the Portfolio invests primarily in
investment-grade debt securities (currently 65%), it may also invest a
significant amount of its assets in lower-rated debt securities.
Investment Results
The following table shows how the Portfolio performed over the past six- and
12-month periods ended March 31, 2004. For comparison, we have included the
Lehman Brothers (LB) Long BAA U.S. Credit Index, a measure of the performance of
a basket of unmanaged corporate debt securities. We have also included the
performance for the Lipper Corporate Debt BBB-Rated Funds Average (the "Lipper
Average"), the average performance of a group of corporate bond funds with
similar objectives to the Portfolio.
INVESTMENT RESULTS*
Periods Ended March 31, 2004
6 Months 12 Months
- --------------------------------------------------------------------------------
AllianceBernstein
Bond Fund
Corporate Bond
Portfolio
Class A 5.62% 13.96%
- --------------------------------------------------------------------------------
Class B 5.26% 13.10%
- --------------------------------------------------------------------------------
Class C 5.34% 13.19%
- --------------------------------------------------------------------------------
Lehman Brothers
Long BAA
U.S. Credit
Index 6.41% 16.40%
- --------------------------------------------------------------------------------
Lipper Corporate
Debt BBB-Rated
Funds Average 3.88% 8.58%
- --------------------------------------------------------------------------------
* The Portfolio's investment results are for the periods shown and are based
on the net asset value (NAV) of each class of shares as of March 31, 2004.
Performance assumes reinvestment of distributions and does not account for
taxes. All fees and expenses related to the operation of the Portfolio have
been deducted, but no adjustment has been made for sales charges that may
apply when shares are purchased or redeemed. Past performance is no guarantee
of future results.
The unmanaged Lehman Brothers (LB) Long BAA U.S. Credit Index does not
reflect fees and expenses associated with the active management of a mutual
fund portfolio. The Index is a measure of corporate and non-corporate fixed
income securities that are rated investment grade (Baa by Moody's Investors
Service or BBB by Standard & Poor's) and have at
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 1
least 10 years to final maturity. The unmanaged Lipper Corporate Debt
BBB-Rated Funds Average (the "Lipper Average") is based on the performance of
a universe of funds that invest at least 65% of their assets in corporate or
government debt issues rated in the top four grades. For the six- and
12-month periods ended March 31, 2004, the Lipper Average consisted of 191
and 184 funds, respectively. Investors cannot invest directly in an index or
an average, and its results are not indicative of any specific investment,
including AllianceBernstein Bond Fund Corporate Bond Portfolio.
Additional investment results appear on pages 5-7.
For the six-month period ended March 31, 2004, the Portfolio underperformed its
benchmark, the LB Long BAA U.S. Credit Index. However, the Fund outperformed the
Lipper Average. Most of the Portfolio's underperformance was attributable to the
shorter duration of the Portfolio (6.25 years) relative to the Index (10.99
years). During the period under review, more specifically in the first quarter
of 2004, yields unexpectedly fell due to several concerns regarding the
sustainability of the economic recovery, weak employment data and demand for
Treasuries from banks. The sharp decrease in yields benefited the longer
duration corporates within the Index more than the shorter, more conservative
duration corporate holdings of the Portfolio. Also detracting from performance
were the Portfolio's holdings in the health care industry, as contagion within
the industry penalized the hospital holding.
The largest positive contributor to performance was the Portfolio's high yield
allocation, which outperformed relative to the investment grade only Index. Also
contributing positively to performance were holdings in the auto industry, which
performed well during the period, as well as the Portfolio's underweight
position in the wireline industry, which underperformed.
Market Review and Investment Strategy
During the semi-annual period, both investment grade and high yield corporate
sectors continued to outperform the other asset sectors within the fixed income
markets, benefiting from a stronger economy and improving credit fundamentals.
Record free cash flow and improving profitability plus declining leverage driven
by a stronger economy led the credit sectors to outperform. The decline in the
ratio of downgrades to upgrades reflected the improvement in credit
fundamentals. In addition, productivity enhancements have benefited corporate
operating profits. According to the LB Long BAA U.S. Credit Index, the long BBB
investment grade corporate market posted a solid return of 6.41% for the
six-month period ended March 31, 2004. Lower-rated BBB corporates outperformed
higher quality rated corporates, and longer duration corporates outperformed
shorter duration corporates. On a nominal basis, top performing industries
within the investment
- --------------------------------------------------------------------------------
2 o AllianceBernstein Bond Fund Corporate Bond Portfolio
grade corprorate sector included autos, airlines, tobacco, services and home
construction. Underperforming industries included media/cable, consumer
products, retailers, finance and wireline communications.
Returns within the high yield sector were even stronger for the period under
review. According to the Index, the high yield market posted a robust 8.39% for
the semi-annual period. Spread levels for high yield compressed 103 basis points
to 414 basis points above like duration Treasuries. By industry, finance,
metals/mining, consumer products, utilities and media/cable outperformed.
Underperforming industries included telecommunications, health care, media
non-cable and food/beverage industries.
Within the investment grade corporate sector, we overweighted crossover and
lower-rated BBB issuers that we believed to be undervalued and would benefit
most from an improving economy. We also overweighted the Portfolio's holdings in
the automotive and cable/media sectors based on value. As spread dispersion
among industries narrowed during the period, our strategy turned more toward
specific issuer selection and diversifying the Portfolio's holdings across
industry sectors. Within the Portfolio's high yield allocation, we also focused
more on individual security selection. One of the Portfolio's largest industry
overweights however, continued to be wireless communications. Within the
wireless sector, we focused on rural providers that have less competition, that
are less affected by the implementation of number portability and that have
improved balance sheets as a result of recent capital-market transactions. We
continued to underweight the utilities industry due to anticipated low demand
growth, forecasted high gas prices and continued capacity additions. Within the
Portfolio's utilities holdings, we invested only in issues that we believed held
good asset protection and sufficient financial liquidity.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 3
PORTFOLIO SUMMARY
March 31, 2004 (unaudited)
INCEPTION DATES
Class A Shares
3/11/74
Class B Shares
1/8/93
Class C Shares
5/3/93
PORTFOLIO STATISTICS
Net Assets ($mil): $1,002.2
SECURITY TYPE
5.8% Preferred Stock
0.5% Yankee Bonds
CORPORATE
14.9% Public Utilities - Electric & Gas
8.4% Automotive
7.7% Banking
6.5% Communications
6.5% Paper/Packaging
5.8% Cable [PIE GRAPH OMITTED]
5.2% Broadcasting/Media
4.7% Communications - Mobile
4.7% Insurance
4.1% Financial
2.6% Health care
2.5% Building/Real Estate
19.1% Other
1.0% Short-Term
All data as of March 31, 2004. The Portfolio's security type breakdown is
expressed as a percentage of total investments (excluding security lending
collateral) and may vary over time. "Other" represents less than 2.5% weightings
in Aerospace/Defense, Chemicals, Conglomerate/Miscellaneous, Consumer
Manufacturing, Containers, Electronics, Energy, Entertainment & Leisure,
Food/Beverage, Gaming, Hotel/Lodging, Industrial, Petroleum Products, Public
Utilities -- Telephone, Publishing, Retail Services, Supermarket/Drug and
Technology.
- --------------------------------------------------------------------------------
4 o AllianceBernstein Bond Fund Corporate Bond Portfolio
INVESTMENT RESULTS
CLASS A SHARE AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2004
- --------------------------------------------------------------------------------
NAV Returns SEC Returns
1 Year 13.96% 9.10%
5 Years 6.97% 6.05%
10 Years 7.71% 7.25%
SEC Yield* 5.20%
The performance shown above represents past performance and does not guarantee
future results. Current performance may be lower or higher than the performance
information shown. You may obtain performance information current to the most
recent month-end by visiting www.alliancebernstein.com (click on
Investors/Products & Services/Mutual Funds). Returns are for Class A shares and
are annualized for periods longer than one year. All fees and expenses related
to the operation of the Portfolio have been deducted. NAV returns do not reflect
sales charges; if sales charges were reflected, the Portfolio's quoted
performance would be lower. SEC returns reflect the 4.25% maximum front-end
sales charge for Class A shares. Performance assumes reinvestment of
distributions and does not account for taxes.
The investment return and principal value of an investment in the Portfolio will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Portfolio carefully before investing. For a free
copy of the Portfolio's prospectus, which contains this and other information,
visit our web site at www.alliancebernstein.com or call your financial advisor
or Alliance at (800) 227-4618. Please read the prospectus carefully before you
invest.
A Word About Risk: The Portfolio invests a portion of its assets in foreign
securities which may magnify fluctuations, particularly in emerging markets.
Price fluctuations may also be caused by changes in interest rates or bond
credit quality ratings. These changes have a greater effect on bonds with longer
maturities than on those with shorter maturities. The Portfolio may also invest
a portion of its assets in below investment-grade securities which are subject
to greater risk than higher-rated securities. While the Portfolio invests
principally in bonds and other fixed income securities, in order to achieve its
investment objectives, the Portfolio may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
instruments involve risks different from, and in certain cases, greater than,
the risks presented by more traditional investments. These risks are fully
discussed in the prospectus.
* SEC yields are calculated based on SEC guidelines for the 30-day period ended
March 31, 2004.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 5
INVESTMENT RESULTS
CLASS B SHARE AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2004
- --------------------------------------------------------------------------------
NAV Returns SEC Returns
1 Year 13.10% 10.10%
5 Years 6.22% 6.22%
10 Years 7.26% 7.26%
SEC Yield* 4.71%
The performance shown above represents past performance and does not guarantee
future results. Current performance may be lower or higher than the performance
information shown. You may obtain performance information current to the most
recent month-end by visiting www.alliancebernstein.com (click on
Investors/Products & Services/Mutual Funds). Returns are for Class B shares and
are annualized for periods longer than one year. All fees and expenses related
to the operation of the Portfolio have been deducted. NAV returns do not reflect
sales charges; if sales charges were reflected, the Portfolio's quoted
performance would be lower. SEC returns reflect the applicable contingent
deferred sales charge for Class B shares (3% year 1, 2% year 2, 1% year 3, 0%
year 4). Performance assumes reinvestment of distributions and does not account
for taxes.
The investment return and principal value of an investment in the Portfolio will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Portfolio carefully before investing. For a free
copy of the Portfolio's prospectus, which contains this and other information,
visit our web site at www.alliancebernstein.com or call your financial advisor
or Alliance at (800) 227-4618. Please read the prospectus carefully before you
invest.
A Word About Risk: The Portfolio invests a portion of its assets in foreign
securities which may magnify fluctuations, particularly in emerging markets.
Price fluctuations may also be caused by changes in interest rates or bond
credit quality ratings. These changes have a greater effect on bonds with longer
maturities than on those with shorter maturities. The Portfolio may also invest
a portion of its assets in below investment-grade securities which are subject
to greater risk than higher-rated securities. While the Portfolio invests
principally in bonds and other fixed income securities, in order to achieve its
investment objectives, the Portfolio may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
instruments involve risks different from, and in certain cases, greater than,
the risks presented by more traditional investments. These risks are fully
discussed in the prospectus.
* SEC yields are calculated based on SEC guidelines for the 30-day period ended
March 31, 2004.
- --------------------------------------------------------------------------------
6 o AllianceBernstein Bond Fund Corporate Bond Portfolio
INVESTMENT RESULTS
CLASS C SHARE AVERAGE ANNUAL RETURNS AS OF MARCH 31, 2004
- --------------------------------------------------------------------------------
NAV Returns SEC Returns
1 Year 13.19% 12.19%
5 Years 6.23% 6.23%
10 Years 6.96% 6.96%
SEC Yield* 4.72%
The performance shown above represents past performance and does not guarantee
future results. Current performance may be lower or higher than the performance
information shown. You may obtain performance information current to the most
recent month-end by visiting www.alliancebernstein.com (click on
Investors/Products & Services/Mutual Funds). Returns are for Class C shares and
are annualized for periods longer than one year. All fees and expenses related
to the operation of the Portfolio have been deducted. NAV returns do not reflect
sales charges; if sales charges were reflected, the Portfolio's quoted
performance would be lower. SEC returns reflect the applicabe contingent
deferred sales charge for Class C shares (1% year 1). Performance assumes
reinvestment of distributions and does not account for taxes.
The investment return and principal value of an investment in the Portfolio will
fluctuate, so that your shares, when redeemed, may be worth more or less than
their original cost. You should consider the investment objectives, risks,
charges and expenses of the Portfolio carefully before investing. For a free
copy of the Portfolio's prospectus, which contains this and other information,
visit our web site at www.alliancebernstein.com or call your financial advisor
or Alliance at (800) 227-4618. Please read the prospectus carefully before you
invest.
A Word About Risk: The Portfolio invests a portion of its assets in foreign
securities which may magnify fluctuations, particularly in emerging markets.
Price fluctuations may also be caused by changes in interest rates or bond
credit quality ratings. These changes have a greater effect on bonds with longer
maturities than on those with shorter maturities. The Portfolio may also invest
a portion of its assets in below investment-grade securities which are subject
to greater risk than higher-rated securities. While the Portfolio invests
principally in bonds and other fixed income securities, in order to achieve its
investment objectives, the Portfolio may at times use certain types of
investment derivatives, such as options, futures, forwards and swaps. These
instruments involve risks different from, and in certain cases, greater than,
the risks presented by more traditional investments. These risks are fully
discussed in the prospectus.
* SEC yields are calculated based on SEC guidelines for the 30-day period ended
March 31, 2004.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 7
PORTFOLIO OF INVESTMENTS
March 31, 2004 (unaudited)
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
CORPORATE DEBT OBLIGATIONS-100.7%
Aerospace/Defense-0.7%
Goodrich Corp.
7.00%, 4/15/38 .............................. $ 6,000 $ 6,536,340
-----------
Automotive-9.1%
Dana Corp.
10.125%, 3/15/10(a) ......................... 2,769 3,212,040
Ford Motor Co.
7.45%, 7/16/31(a) ........................... 25,000 25,039,375
Ford Motor Credit Co.
7.375%, 2/01/11 ............................. 10,000 10,920,330
7.875%, 6/15/10 ............................. 10,000 11,203,490
General Motors Acceptance Corp.
8.00%, 11/01/31(a) .......................... 15,000 16,651,800
General Motors Corp.
8.375%, 7/15/33(a) .......................... 17,500 19,910,012
TRW Automotive
9.375%, 2/15/13 ............................. 2,967 3,426,885
11.00%, 2/15/13 ............................. 1,076 1,291,200
-----------
91,655,132
-----------
Banking-8.4%
CA Preferred Funding Trust
7.00%, 1/30/49 .............................. 17,000 17,900,354
Dime Capital Trust I
Series A
9.33%, 5/06/27 .............................. 9,028 11,179,562
Great Western Financial Trust II
8.206%, 2/01/27 ............................. 14,456 17,120,284
HBOS Capital Funding LP (United Kingdom)
6.85%, 3/29/49 .............................. 9,000 9,401,661
HVB Funding Trust III
9.00%, 10/22/31(b) .......................... 4,000 5,181,968
Mizuho Finance Group (Cayman Islands)
8.375%, 12/29/49 ............................ 12,000 12,913,104
UF J Finance Aruba AEC (Aruba)
6.75%, 7/15/13 .............................. 9,000 9,970,110
-----------
83,667,043
-----------
Broadcasting/Media-5.7%
AOL Time Warner, Inc.
7.625%, 4/15/31 ............................. 5,000 5,871,565
Clear Channel Communications, Inc.
5.75%, 1/15/13(a) ........................... 3,500 3,715,267
News America, Inc.
7.30%, 4/30/28(a) ........................... 15,000 17,244,630
- --------------------------------------------------------------------------------
8 o AllianceBernstein Bond Fund Corporate Bond Portfolio
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
Sinclair Broadcast Group, Inc.
8.00%, 3/15/12(a) ........................... $ 4,525 $ 4,926,594
Time Warner, Inc.
8.375%, 3/15/23(c) .......................... 20,000 25,023,780
-----------
56,781,836
-----------
Building/Real Estate-2.8%
K. Hovnanian Enterprises, Inc.
6.375%, 12/15/14(b) ......................... 10,000 10,125,000
KB HOME
7.75%, 2/01/10 .............................. 2,775 3,017,812
LNR Property Corp.
7.625%, 7/15/13 ............................. 2,910 3,099,150
The Ryland Group, Inc.
9.75%, 9/01/10 .............................. 9,939 11,380,155
-----------
27,622,117
-----------
Cable-6.3%
AT&T Broadband Corp.
9.455%, 11/15/22(c) ......................... 30,420 41,397,909
Cablevision Systems New York Group
8.00%, 4/15/12(b) ........................... 3,995 3,995,000
CSC Holdings, Inc.
6.75%, 4/15/12(b) ........................... 1,005 1,005,000
EchoStar DBS Corp.
6.375%, 10/01/11(a)(b) ...................... 5,000 5,337,500
Insight Midwest LP
9.75%, 10/01/09(a) .......................... 2,000 2,095,000
Rogers Cable, Inc. (Canada)
5.50%, 3/15/14(b) ........................... 9,500 9,274,375
-----------
63,104,784
-----------
Chemicals-0.7%
Huntsman International LLC
9.875%, 3/01/09(a) .......................... 6,000 6,630,000
-----------
Communications-7.0%
AT&T Corp.
8.75%, 11/15/31 ............................. 2,000 2,367,304
Deutsche Telekom International Finance BV
(Netherlands)
8.75%, 6/15/30 .............................. 10,000 13,157,680
Eircom Funding (Ireland)
8.25%, 8/15/13 .............................. 1,340 1,500,800
Koninklijke KPN NV (Netherlands)
8.00%, 10/01/10(a) .......................... 15,000 18,298,635
Sprint Capital Corp.
8.75%, 3/15/32(c) ........................... 23,000 29,174,948
TCI Communications Financing III
9.65%, 3/31/27 .............................. 5,000 6,079,450
-----------
70,578,817
-----------
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 9
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
Communications - Mobile-5.1%
AT&T Wireless Services, Inc.
7.875%, 3/01/11 ............................. $ 5,000 $ 5,972,490
8.125%, 5/01/12 ............................. 11,500 14,034,301
8.75%, 3/01/31(a) ........................... 10,000 13,017,070
Nextel Communications, Inc.
6.875%, 10/31/13(a) ......................... 10,000 10,675,000
9.375%, 11/15/09 ............................ 2,285 2,496,362
Rural Cellular Corp.
8.25%, 3/15/12(b) ........................... 4,995 5,132,363
-----------
51,327,586
-----------
Conglomerate/Miscellaneous-1.6%
Hutchison Whampoa International, Ltd.
(Cayman Islands)
7.45%, 11/24/33(a)(b) ....................... 10,000 10,504,880
Tyco International Group, SA (Luxembourg)
6.00%, 11/15/13(b) .......................... 5,000 5,281,795
-----------
15,786,675
-----------
Consumer Manufacturing-0.4%
Playtex Products, Inc.
8.00%, 3/01/11(b) ........................... 3,995 4,174,775
-----------
Containers-1.0%
Crown Euro Holdings, SA (France)
9.50%, 3/01/11(a) ........................... 5,225 5,891,188
Greif Bros. Corp. Cl.A
8.875%, 8/01/12(a) .......................... 3,800 4,161,000
-----------
10,052,188
-----------
Electronics-0.2%
L-3 Communications Corp.
6.125%, 7/15/13 ............................. 2,000 2,075,000
-----------
Energy-0.5%
CITGO Petroleum Corp.
11.375%, 2/01/11 ............................ 2,290 2,685,025
Hilcorp Energy
10.50%, 9/01/10(b) .......................... 2,000 2,230,000
-----------
4,915,025
-----------
Entertainment & Leisure-1.2%
Six Flags, Inc.
9.50%, 2/01/09(a) ........................... 6,125 6,492,500
Universal City Development Partners
11.75%, 4/01/10 ............................. 5,055 5,908,031
-----------
12,400,531
-----------
Financial-4.4%
iStar Financial, Inc.
6.00%, 12/15/10 ............................. 4,505 4,752,775
JSG Funding Plc (Ireland)
9.625%, 10/01/12 ............................ 2,605 2,956,675
-----------
- --------------------------------------------------------------------------------
10 o AllianceBernstein Bond Fund Corporate Bond Portfolio
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
Ohio National Financial Services, Inc.
6.35%, 4/01/13(b) ........................... $ 5,000 $ 5,406,645
Royal & Sun Alliance Insurance Group PLC
(United Kingdom)
8.95%, 10/15/29(a) .......................... 5,000 5,311,770
Safeco Capital Trust I
8.072%, 7/15/37 ............................. 13,000 14,980,615
Transamerica Capital II
7.65%, 12/01/26(b) .......................... 10,000 11,164,610
-----------
44,573,090
-----------
Food/Beverage-0.6%
Dole Food Co., Inc.
8.875%, 3/15/11 ............................. 2,170 2,376,150
Swift & Co.
10.125%, 10/01/09(a) ........................ 3,500 3,797,500
-----------
6,173,650
-----------
Gaming-1.4%
Harrah's Operating Co., Inc.
5.375%, 12/15/13(b) ......................... 10,000 10,211,260
Park Place Entertainment Corp.
9.375%, 2/15/07 ............................. 3,500 3,955,000
-----------
14,166,260
-----------
Healthcare-2.8%
Concentra Operating Corp.
13.00%, 8/15/09 ............................. 2,390 2,640,950
HCA, Inc.
5.75%, 3/15/14(a) ........................... 10,000 10,010,570
6.25%, 2/15/13(a) ........................... 4,000 4,175,080
6.30%, 10/01/12 ............................. 5,000 5,249,365
6.75%, 7/15/13 .............................. 6,000 6,468,576
-----------
28,544,541
-----------
Hotel/Lodging-1.4%
Corrections Corp. of America
9.875%, 5/01/09 ............................. 1,155 1,305,150
Extended Stay America, Inc.
9.875%, 6/15/11 ............................. 6,250 7,375,000
Intrawest Corp. (Canada)
7.50%, 10/15/13 ............................. 5,000 5,187,500
-----------
13,867,650
-----------
Industrial-0.4%
Flowserve Corp.
12.25%, 8/15/10 ............................. 1,173 1,357,748
SPX Corp.
7.50%, 1/01/13 .............................. 2,345 2,544,325
-----------
3,902,073
-----------
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AllianceBernstein Bond Fund Corporate Bond Portfolio o 11
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
Insurance-5.1%
Assurant, Inc.
6.75%, 2/15/34(b) ......................... $ 6,500 $ 6,837,506
Crum & Forster
10.375%, 6/15/13(b) ....................... 1,935 2,196,225
Liberty Mutual Group
7.00%, 3/15/34(b) ......................... 5,000 4,997,665
Mangrove Bay PassThru Trust
6.102%, 7/15/33(b) ........................ 10,000 10,445,800
Nationwide Mutual Insurance Co.
7.875%, 4/01/33(a)(b) ..................... 5,000 6,132,455
8.25%, 12/01/31(a)(b) ..................... 5,000 6,358,985
Zurich Capital Trust I
8.376%, 6/01/37(a)(b) ..................... 12,500 14,527,650
-----------
51,496,286
-----------
Paper/Packaging-7.1%
Abitibi-Consolidated, Inc. (Canada)
8.85%, 8/01/30(a) ......................... 4,220 4,307,493
Anchor Glass Container Corp.
11.00%, 2/15/13(a) ........................ 2,510 2,930,425
Berry Plastics Corp.
10.75%, 7/15/12(a) ........................ 3,925 4,464,687
Georgia-Pacific Corp.
9.375%, 2/01/13(a) ........................ 2,500 2,956,250
International Paper Co.
5.25%, 4/01/16(a) ......................... 15,000 14,952,990
Norske Skogindustrier ASA (Norway)
7.625%, 10/15/11(a)(b) .................... 10,000 11,644,090
Owens-Brockway Glass Container
8.25%, 5/15/13(a) ......................... 2,000 2,070,000
8.875%, 2/15/09 ........................... 7,660 8,311,100
Pliant Corp.
13.00%, 6/01/10(a) ........................ 1,980 1,722,600
Smurfit-Stone Container Corp.
8.25%, 10/01/12 ........................... 4,205 4,604,475
Stone Container Corp.
9.75%, 2/01/11 ............................ 1,625 1,824,063
Weyerhaeuser Co.
6.875%, 12/15/33(a) ....................... 10,000 10,902,620
-----------
70,690,793
-----------
Petroleum Products-2.3%
Amerada Hess Corp.
7.30%, 8/15/31 ............................ 5,000 5,356,920
7.375%, 10/01/09 .......................... 5,500 6,307,274
7.875%, 10/01/29(a) ....................... 10,000 11,352,970
-----------
23,017,164
-----------
- --------------------------------------------------------------------------------
12 o AllianceBernstein Bond Fund Corporate Bond Portfolio
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
Public Utilities - Electric & Gas-16.1%
AVA Capital Trust III
6.50%, 4/01/34 ............................ $ 10,000 $ 10,000,000
Calenergy Co., Inc.
8.48%, 9/15/28 ............................ 23,000 29,881,807
CenterPoint Energy Resources Corp.
Series B
7.875%, 4/01/13 ........................... 29,935 34,718,763
Dominion Resources Capital Trust III
8.40%, 1/15/31(a) ......................... 29,000 36,615,429
FirstEnergy Corp.
7.375%, 11/15/31(a) ....................... 34,480 38,578,913
Pacific Gas & Electric Co.
6.05%, 3/01/34 ............................ 5,000 5,078,285
PG&E Corp.
6.875%, 7/15/08(b) ........................ 1,335 1,463,494
Semco Energy, Inc.
7.125%, 5/15/08 ........................... 415 437,825
7.75%, 5/15/13 ............................ 1,585 1,695,950
The AES Corp.
8.75%, 5/15/13(b) ......................... 955 1,055,275
9.00%, 5/15/15(b) ......................... 1,565 1,735,194
------------
161,260,935
------------
Public Utilities - Telephone-1.0%
Telecom Italia Capital (Luxembourg)
6.375%, 11/15/33(a)(b) .................... 10,000 10,491,330
------------
Publishing-0.8%
Dex Media East LLC
9.875%, 11/15/09(a) ....................... 4,000 4,520,000
Dex Media West LLC
8.50%, 8/15/10(b) ......................... 585 647,888
9.875%, 8/15/13(b) ........................ 2,305 2,570,075
------------
7,737,963
------------
Retail-0.8%
Toys "R" Us, Inc.
7.875%, 4/15/13(a) ........................ 7,500 7,912,500
------------
Services-1.8%
Allied Waste North America, Inc.
10.00%, 8/01/09 ........................... 6,500 7,003,750
Iron Mountain, Inc.
8.625%, 4/01/13 ........................... 5,000 5,475,000
Service Corp.
6.00%, 12/15/05 ........................... 2,500 2,618,750
7.70%, 4/15/09 ............................ 2,500 2,693,750
------------
17,791,250
------------
Supermarket/Drug-2.2%
Delhaize America, Inc.
9.00%, 4/15/31(a) ......................... 18,555 22,242,806
------------
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 13
Shares or
Principal
Amount
(000) U.S. $ Value
- --------------------------------------------------------------------------------
Technology-1.8%
Flextronics International, Ltd. (Singapore)
6.50%, 5/15/13(a) ......................... $ 5,000 $ 5,287,500
Motorola, Inc.
8.00%, 11/01/11(a) ........................ 8,000 9,575,704
ON Semiconductor Corp.
12.00%, 3/15/10 ........................... 2,150 2,666,000
--------------
17,529,204
--------------
Total Corporate Debt Obligations
(cost $921,022,429) ....................... 1,008,705,344
--------------
PREFERRED STOCKS-6.2%
Banking-2.6%
CoBank
Series B(b) ............................... 200,000 10,886,000
Equity Residential
Series N .................................. 200,000 5,026,000
Wells Fargo Capital Trust VII ................ 399,500 10,179,260
--------------
26,091,260
--------------
Communications-3.6%
Centaur Funding Corp. (Cayman Islands)
Series B(b) ............................... 28,280 36,431,993
--------------
Total Preferred Stocks
(cost $53,450,565) ........................ 62,523,253
YANKEE BOND-0.5%
TPSA Finance BV (Netherlands)
7.75%, 12/10/08(b)
(cost $4,893,750) ......................... $ 4,500 5,196,645
--------------
SHORT-TERM INVESTMENTS-1.0%
U.S. Treasury Bills-1.0%
U.S. Treasury Bills
Zero coupon, 4/01/04(d) ................... 5,000 5,000,000
Zero coupon, 9/30/04 ...................... 5,000 4,975,278
--------------
(amortized cost $9,975,278) ............... 9,975,278
--------------
Total Investment Before Security
Lending Collateral-108.4%
(cost $989,342,022) ....................... 1,086,400,520
--------------
- --------------------------------------------------------------------------------
14 o AllianceBernstein Bond Fund Corporate Bond Portfolio
Shares or
Principal
Amount
(000) U.S. $ Value
- -------------------------------------------------------------------------------
INVESTMENT OF CASH COLLATERAL
FOR SECURITIES LOANED+-16.8%
Short-Term Investment
CC USA Prime
1.06%, 6/14/04 ............................ $ 25,000 $ 24,998,750
Deutsche Bank
1.21%, 12/03/04 ........................... 15,000 15,000,000
Federal Home Loan Bank
1.27%, 4/26/05 ............................ 5,000 5,000,000
Federal Home Loan Mortgage Corp.
1.14%, 8/10/04 ............................ 25,000 25,000,000
Gatham
1.04%, 4/12/04 ............................ 15,000 14,988,958
General Electric
5.38%, 4/23/04 ............................ 5,000 5,227,426
Goldman Sachs
1.05%, 4/13/04 ............................ 10,000 9,996,208
Gotham Funding
1.07%, 4/01/04 ............................ 9,747 9,734,543
LB Baden-Wuertenberg
1.23%, 4/15/04 ............................ 6,000 6,199,920
RECCPP
0.00%, 4/04/04 ............................ 25,000 24,988,445
Sigma Finance
1.22%, 12/03/04 ........................... 10,000 10,000,000
---------------
151,134,250
---------------
UBS Private Money Market Fund, LLC
1.00% ..................................... 16,759,780 16,759,780
---------------
Total Investment of Cash Collateral for
Securities Loaned
(cost $167,894,030) ....................... 167,894,030
---------------
Total Investments-125.2%
(cost $1,157,236,052) .................. 1,254,294,550
Other assets less liabilities-(25.2%) ..... (252,081,749)
---------------
Net Assets-100% ........................... $ 1,002,212,801
---------------
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 15
CREDIT DEFAULT SWAPTIONS (see Note D)
Exercise Expiration
Description Contracts(e) Price Month U.S. $ Value
- --------------------------------------------------------------------------------
Payer Swaptions:
- ----------------
General Motors Acceptance Corp. 20 2.40% June '04 $ (86,000)
Toys "R" Us, Inc. 8 3.75% June '04 (54,000)
Receiver Swaption:
- ------------------
Toys "R" Us, Inc. 8 2.25% June '04 (36,750)
---------
(premiums received $197,500) $(176,750)
---------
FINANCIAL FUTURES CONTRACTS SOLD (see Note D)
Value at Unrealized
Number of Expiration Original March 31, Appreciation/
Type Contracts Month Value 2004 (Depreciation)
- --------------------------------------------------------------------------------
U.S.Treasury
Note 5 Yr
Futures 2,592 June 2004 $292,899,877 $294,354,000 $ (1,454,123)
Swap 10 Yr
Futures 1,305 June 2004 148,262,043 147,872,812 389,231
------------
$ (1,064,892)
------------
REVERSE REPURCHASE AGREEMENTS (see Note D)
Broker Interest Rate Maturity Amount
- --------------------------------------------------------------------------------
Deutsche Alex Brown 1.125% 12/31/04 $92,229,898
+ See Note E for securities lending information.
(a) Represents security position out on loan.
(b) Security is exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers. At March 31, 2004,
the aggregate market value of these securities amounted to $222,643,441 or
22.2% of net assets.
(c) Positions, or portions thereof, with an aggregate market value of
$95,596,637 have been segregated to collateralize reverse repurchase
agreements.
(d) Position with a market value of $5,000,000 has been segregated to
collateralize margin requirements for the open futures contracts.
(e) One contract relates to principal amount of $1,000,000.
See notes to financial statements.
- --------------------------------------------------------------------------------
16 o AllianceBernstein Bond Fund Corporate Bond Portfolio
STATEMENT OF ASSETS & LIABILITIES
March 31, 2004 (unaudited)
Assets
Investments in securities, at value
(cost $1,157,236,052--including investment of
cash collateral for securities loaned of
$167,894,030)........................................ $ 1,254,294,550(a)
Cash.................................................... 1,685,282
Interest and dividends receivable....................... 19,256,961
Receivable for investment securities sold............... 13,170,608
Receivable for capital stock sold....................... 280,720
---------------
Total assets............................................ 1,288,688,121
---------------
Liabilities
Outstanding written swaptions, at value
(premiums received $197,500)......................... 176,750
Payable for collateral on securities loaned............. 167,894,030
Payable for reverse repurchase agreement................ 92,229,898
Payable for investment securities purchased............. 19,975,278
Payable for variation margin on futures contracts....... 1,705,781
Dividends payable....................................... 1,517,493
Payable for capital stock redeemed...................... 1,471,975
Distribution fee payable................................ 538,400
Advisory fee payable.................................... 428,018
Accrued expenses........................................ 537,697
---------------
Total liabilities....................................... 286,475,320
---------------
Net Assets.............................................. $ 1,002,212,801
---------------
Composition of Net Assets
Capital stock, at par................................... $ 81,638
Additional paid-in capital.............................. 1,253,143,980
Distributions in excess of net investment income........ (869,954)
Accumulated net realized loss on investment
transactions......................................... (346,157,219)
Net unrealized appreciation of investments.............. 96,014,356
---------------
$1,002,212,801
---------------
Calculation of Maximum Offering Price Class A
Shares Net asset value and redemption price per share
($526,360,038 / 42,859,275 shares of capital stock
issued and outstanding).............................. $12.28
Sales charge--4.25% of public offering price............ .55
------
Maximum offering price.................................. $12.83
------
Class B Shares
Net asset value and offering price per share
($330,174,563 / 26,911,357 shares of capital stock
issued and outstanding).............................. $12.27
------
Class C Shares
Net asset value and offering price per share
($141,741,228 / 11,546,578 shares of capital stock
issued and outstanding).............................. $12.28
------
Class R Shares
Net asset value and offering price per share
($10,338 / 842 shares of capital stock
issued and outstanding).............................. $12.28
------
Advisor Class Shares
Net asset value, redemption and offering price per share
($3,926,634 / 319,511 shares of capital stock
issued and outstanding)................................. $12.29
------
(a) Includes securities on loan with a value of $162,321,164 (see Note E).
See notes to financial statements.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 17
STATEMENT OF OPERATIONS
Six Months Ended March 31, 2004 (unaudited)
Investment Income
Interest............................... $ 35,518,441
Dividends.............................. 2,791,817 $ 38,310,258
---------------
Expenses
Advisory fee........................... 2,911,390
Distribution fee--Class A.............. 793,595
Distribution fee--Class B.............. 1,785,447
Distribution fee--Class C.............. 749,900
Distribution fee--Class R.............. 21
Transfer agency........................ 1,036,850
Custodian.............................. 132,672
Printing............................... 118,506
Audit and legal........................ 58,533
Administrative......................... 53,500
Registration fees...................... 46,998
Directors' fees........................ 9,921
Miscellaneous.......................... 30,498
---------------
Total expenses before interest......... 7,727,831
Interest expense....................... 514,857
---------------
Total expenses......................... 8,242,688
Less: expenses waived and reimbursed
by the Adviser (see Note B)......... (155,396)
Less: expense offset arrangement
(see Note B)........................ (94)
---------------
Net expenses........................... 8,087,198
---------------
Net investment income.................. 30,223,060
---------------
Realized and Unrealized Gain (Loss)
on Investment Transactions
Net realized gain (loss) on:
Investment transactions............. 30,529,318
Futures contracts................... (20,532,656)
Net change in unrealized
appreciation/depreciation of:
Investments......................... 7,303,586
Written options..................... 20,750
Futures contracts................... 7,718,844
---------------
Net gain on investment transactions.... 25,039,842
---------------
Net Increase in Net Assets
from Operations..................... $ 55,262,902
---------------
See notes to financial statements.
- --------------------------------------------------------------------------------
18 o AllianceBernstein Bond Fund Corporate Bond Portfolio
- --------------------------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
Six Months
Ended July 1, 2003
March 31, to Year Ended
2004 September 30, June 30,
(unaudited) 2003* 2003
------------- ------------- -------------
Increase (Decrease) in
Net Assets from Operations
Net investment income........ $ 30,223,060 $ 15,915,883 $ 72,585,956
Net realized gain (loss) on
investment transactions... 9,996,662 24,829,508 (51,405,583)
Net change in unrealized
appreciation/depreciation
of investments............ 15,043,180 (31,793,337) 180,392,459
------------- ------------- -------------
Net increase in net assets
from operations........... 55,262,902 8,952,054 201,572,832
Dividends and Distributions
to Shareholders from
Net investment income
Class A.................... (15,541,461) (8,307,900) (35,897,785)
Class B.................... (9,219,847) (5,467,237) (26,405,194)
Class C.................... (3,876,282) (2,207,358) (10,193,042)
Class R.................... (234) -0- -0-
Advisor Class.............. (105,764) (40,918) (69,827)
Tax return of capital
Class A.................... -0- -0- (1,251,077)
Class B.................... -0- -0- (920,250)
Class C.................... -0- -0- (355,239)
Advisor Class.............. -0- -0- (2,434)
Capital Stock Transactions
Net decrease................. (103,989,328) (57,741,250) (140,779,501)
------------- ------------- -------------
Total decrease............... (77,470,014) (64,812,609) (14,301,517)
Net Assets
Beginning of period.......... 1,079,682,815 1,144,495,424 1,158,796,941
------------- ------------- -------------
End of period (including
distributions in excess
of net investment income
of ($869,954), ($2,349,426)
and ($2,436,049),
respectively) ............ $1,002,212,801 $1,079,682,815 $1,144,495,424
-------------- -------------- --------------
* The Portfolio changed its fiscal year end from June 30 to September 30.
See notes to financial statements.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 19
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
March 31, 2004 (unaudited)
NOTE A
Significant Accounting Policies
AllianceBernstein Bond Fund, Inc. (the "Fund") is registered under the
Investment Company Act of 1940 as a diversified, open-end management investment
company. The Fund, which is a Maryland corporation, operates as a series company
currently comprised of three portfolios: the Corporate Bond Portfolio, the
Quality Bond Portfolio and the U.S. Government Portfolio. Each series is
considered to be a separate entity for financial reporting and tax purposes.
This report relates only to the Corporate Bond Portfolio. The Corporate Bond
Portfolio (the "Portfolio") offers Class A, Class B, Class C, Class R and
Advisor Class shares. Class A shares are sold with a front-end sales charge of
up to 4.25% for purchases not exceeding $1,000,000. With respect to purchases of
$1,000,000 or more, Class A shares redeemed within one year of purchase may be
subject to a contingent deferred sales charge of 1%. Class B shares are
currently sold with a contingent deferred sales charge which declines from 3% to
zero depending on the period of time the shares are held. Class B shares will
automatically convert to Class A shares six years after the end of the calendar
month of purchase. Class C shares are subject to a contingent deferred sales
charge of 1% on redemptions made within the first year after purchase. Class R
Shares are sold without an initial or contingent deferred sales charge and are
offered to certain group retirement plans. Advisor Class shares are sold without
an initial or contingent deferred sales charge and are not subject to ongoing
distribution expenses. Advisor Class shares are offered to investors
participating in fee-based programs and certain retirement plan accounts. All
five classes of shares have identical voting, dividend, liquidation and other
rights, except that each class bears different distribution expenses and has
exclusive voting rights with respect to its distribution plan. The financial
statements have been prepared in conformity with accounting principles generally
accepted in the United States which require management to make certain estimates
and assumptions that affect the reported amounts of assets and liabilities in
the financial statements and amounts of income and expenses during the reporting
period. Actual results could differ from those estimates. Additional information
about some of the items discussed in these Notes to Financial Statements is
contained in the Fund's Statement of Additional Information, which is available
upon request. The following is a summary of significant accounting policies
followed by the Portfolio.
1. Security Valuation
In accordance with Pricing Policies adopted by the Board of Directors of the
Fund (the "Pricing Policies") and applicable law, portfolio securities are
valued at current market value or at fair value. The Board of Directors has
delegated to Alliance Capital Management, L.P. (the "Adviser"), subject to the
Board's continuing oversight, certain responsibilities with respect to the
implementation of the Pricing Policies. Pursuant to the Pricing Policies,
securities for which market quotations are readily available are valued at their
current market value. In general, the market value of these securities is
determined as follows:
- --------------------------------------------------------------------------------
20 o AllianceBernstein Bond Fund Corporate Bond Portfolio
Securities listed on a national securities exchange or on a foreign securities
exchange are valued at the last sale price at the close of the exchange or
foreign securities exchange. If there has been no sale on such day, the
securities are valued at the mean of the closing bid and asked prices on such
day. If no bid or asked prices are quoted on such day, then the security is
valued in good faith at fair value in accordance with the Pricing Policies.
Securities listed on more than one exchange are valued by reference to the
principal exchange on which the securities are traded; securities not listed on
an exchange but traded on The Nasdaq Stock Market, Inc. ("NASDAQ") are valued in
accordance with the NASDAQ Official Closing Price; listed put or call options
are valued at the last sale price. If there has been no sale on that day, such
securities will be valued at the closing bid prices on that day; open futures
contracts and options thereon are valued using the closing settlement price or,
in the absence of such a price, the most recent quoted bid price. If there are
no quotations available for the day of valuations, the last available closing
settlement price is used; securities traded in the over-the-counter market, (but
excluding securities traded on NASDAQ) are valued at the mean of the current bid
and asked prices as reported by the National Quotation Bureau or other
comparable sources; U.S. Government securities and other debt instruments having
60 days or less remaining until maturity are valued at amortized cost if their
original maturity was 60 days or less, or by amortizing their fair value as of
the 61st day prior to maturity if their original term to maturity exceeded 60
days; fixed-income securities, including mortgage backed and asset backed
securities, may be valued on the basis of prices provided by a pricing service
or at a price obtained from one or more of the major broker/dealers. In cases
where broker/dealer quotes are obtained, the Pricing Policies provide that the
Adviser may establish procedures whereby changes in market yields or spreads are
used to adjust, on a daily basis, a recently obtained quoted price on a
security; and OTC and other derivatives are valued on the basis of a quoted bid
price or spread from a major broker/dealer in such security. Securities for
which market quotations are not readily available are valued at fair value in
accordance with the Pricing Policies.
2. Taxes
It is the policy of the Portfolio to meet the requirements of the Internal
Revenue Code applicable to regulated investment companies and to distribute all
of its investment company taxable income and net realized gains, if any, to
shareholders. Therefore, no provisions for federal income or excise taxes are
required.
3. Investment Income and Investment Transactions
Dividend income is recorded on the ex-dividend date. Interest income is accrued
daily. Investment transactions are accounted for on the trade date securities
are purchased or sold. Investment gains and losses are determined on the
identified cost basis. The Portfolio accretes discounts as adjustments to
interest income. Additionally, the Portfolio amortizes premiums on debt
securities for financial statement reporting purposes.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 21
4. Income and Expenses
All income earned and expenses incurred by the Portfolio are borne on a pro-rata
basis by each settled class of shares, based on proportionate interest in the
Portfolio represented by the net assets of such class, except that the
Portfolio's Class B and Class C shares bear higher distribution and transfer
agent fees than Class A, Class R and Advisor Class shares. Advisor Class shares
have no distribution fees.
5. Dividends and Distributions
Dividends and distributions to shareholders are recorded on the ex-dividend
date. Income dividends and capital gains distributions are determined in
accordance with federal tax regulations and may differ from those determined in
accordance with accounting principles generally accepted in the United States.
To the extent these differences are permanent, such amounts are reclassified
within the capital accounts based on their federal tax basis treatment;
temporary differences do not require such reclassification.
6. Change of Fiscal Year End
The Portfolio changed its fiscal year end from June 30 to September 30.
Accordingly, the statement of changes in net assets and financial highlights
include the period from July 1, 2003 to September 30, 2003.
NOTE B
Advisory Fee and Other Transactions with Affiliates
Under the terms of an investment advisory agreement, the Portfolio pays the
Adviser an advisory fee at an annual rate of .625 of 1% of the first $500
million and .50 of 1% in excess of $500 million of the Portfolio's average daily
net assets. The fee is accrued daily and paid monthly.
Effective January 1, 2004, the Adviser began waiving a portion of its advisory
fee so as to charge the Portfolio at the reduced annual rate of .50% of the
first $2.5 billion, .45% of the next $2.5 billion and .40% in excess of $5
billion, of the Portfolio's average daily net assets. Through March 31, 2004
such waiver amounted to $155,396. The amount of the fee waiver may increase or
decrease as a result of a final, definitive agreement with the New York Attorney
General's Office ("NYAG"). For a more complete discussion of the Adviser's
settlement with the NYAG, please see "Legal Proceedings" below.
Pursuant to the advisory agreement, the Portfolio paid $53,500 to the Adviser
representing the cost of certain legal and accounting services provided to the
Portfolio by the Adviser for the six months ended March 31, 2004.
The Portfolio compensates Alliance Global Investor Services, Inc. (AGIS), a
wholly-owned subsidiary of the Adviser, under a Transfer Agency Agreement for
providing personnel and facilities to perform transfer agency services for the
Portfolio. Such compensation amounted to $612,979 for the six months ended March
31, 2004.
- --------------------------------------------------------------------------------
22 o AllianceBernstein Bond Fund Corporate Bond Portfolio
For the six months ended March 31, 2004, the Portfolio's expenses were reduced
by $94 under an expense offset arrangement with AGIS.
AllianceBernstein Investment Research and Management, Inc. (the "Distributor"),
a wholly-owned subsidiary of the Adviser, serves as the distributor of the
Portfolio's shares. The Distributor has advised the Portfolio that it has
retained front-end sales charges of $12,644 from the sales of Class A shares and
received $6,163, $202,233, and $10,795, respectively, in contingent deferred
sales charges imposed upon redemptions by shareholders of Class A, Class B and
Class C shares, respectively, for the six months ended March 31, 2004.
NOTE C
Distribution Services Agreement
The Portfolio has adopted a Distribution Services Agreement (the "Agreement")
pursuant to Rule 12b-1 under the Investment Company Act of 1940. Under the
Agreement, the Portfolio pays distribution and servicing fees to the Distributor
at an annual rate of up to .30 of 1% of the Portfolio's average daily net assets
attributable to Class A shares, .50 of 1% of the average daily net assets
attributable to Class R shares and 1% of the average daily net assets
attributable to both Class B and Class C shares. There are no distribution and
servicing fees on the Advisor Class shares. The fees are accrued daily and paid
monthly. The Agreement provides that the Distributor will use such payments in
their entirety for distribution assistance and promotional activities. The
Distributor has advised the Portfolio that it has incurred expenses in excess of
the distribution costs reimbursed by the Portfolio in the amount of $12,851,790
and $5,257,107 for Class B and Class C shares, respectively. Such costs may be
recovered from the Portfolio in future periods so long as the Agreement is in
effect. In accordance with the Agreement, there is no provision for recovery of
unreimbursed distribution costs incurred by the Distributor beyond the current
fiscal year for Class A shares. The Agreement also provides that the Adviser may
use its own resources to finance the distribution of the Portfolio's shares.
NOTE D
Investment Transactions
Purchases and sales of investment securities (excluding short-term investments)
for the period ended March 31, 2004, were as follows:
Purchases Sales
--------------- ---------------
Investment securities (excluding
U.S. government securities)......... $ 721,766,155 $ 821,793,970
U.S. government securities............. -0- -0-
The cost of investments for federal income tax purposes were substantially the
same as the cost for financial reporting purposes. Accordingly, gross unrealized
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 23
appreciation and unrealized depreciation (excluding written options and futures)
are as follows:
Gross unrealized appreciation........................... $ 98,332,729
Gross unrealized depreciation........................... (1,274,231)
---------------
Net unrealized appreciation............................. $ 97,058,498
---------------
1. Financial Futures Contracts
The Portfolio may buy or sell financial futures contracts for the purpose of
hedging its portfolio against adverse effects of anticipated movements in the
market. The Portfolio bears the market risk that arises from changes in the
value of these financial instruments and the imperfect correlation between
movements in the price of the futures contracts and movements in the price of
the securities hedged or used for cover.
At the time the Portfolio enters into a futures contract, the Portfolio deposits
and maintains as collateral an initial margin as required by the exchange on
which the transaction is affected. Pursuant to the contract, the Portfolio
agrees to receive from or pay to the broker an amount of cash equal to the daily
fluctuation in the value of the contract. Such receipts or payments are known as
variation margin and are recorded by the Portfolio as unrealized gains or
losses. Risks may arise from the potential inability of a counterparty to meet
the terms of the contract. When the contract is closed, the Portfolio records a
realized gain or loss equal to the difference between the value of the contract
at the time it was opened and the time it was closed.
2. Option Transactions
For hedging and investment purposes, the Portfolio may purchase and write (sell)
put and call options on debt securities that are traded on U.S. and foreign
securities exchanges and over-the-counter markets and swap agreements (commonly
referred to as swaptions).
The risk associated with purchasing an option is that the Portfolio pays a
premium whether or not the option is exercised. Additionally, the Portfolio
bears the risk of loss of premium and change in market value should the
counterparty not perform under the contract. Put and call options purchased are
accounted for in the same manner as portfolio securities. The cost of securities
acquired through the exercise of call options is increased by premiums paid. The
proceeds from securities sold through the exercise of put options are decreased
by the premiums paid.
When the Portfolio writes an option, the premium received by the Portfolio is
recorded as a liability and is subsequently adjusted to the current market value
of the option written. Premiums received from written options which expire
unexercised are recorded by the Portfolio on the expiration date as realized
gains from options written. The difference between the premium received and the
amount
- --------------------------------------------------------------------------------
24 o AllianceBernstein Bond Fund Corporate Bond Portfolio
paid on effecting a closing purchase transaction, including brokerage
commissions, is also treated as a realized gain, or if the premium received is
less than the amount paid for the closing purchase transaction, as a realized
loss. If a call option is exercised, the premium received is added to the
proceeds from the sale of the underlying security in determining whether the
Portfolio has realized a gain or loss. If a put option is exercised, the premium
received reduces the cost basis of the security purchased by the Portfolio. In
writing an option, the Portfolio bears the market risk of an unfavorable change
in the price of the security underlying the written option. Exercise of an
option written by the Portfolio could result in the Portfolio selling or buying
a security at a price different from the current market value.
Transactions in swaptions for the six months ended March 31, 2004 were as
follows:
Number of Premiums
Contracts Received
------------- -------------
Swaptions outstanding at September 30,
2003 ............................... -0- $ -0-
Swaptions written...................... 36 197,500
Swaptions terminated in closing purchase
transactions........................ -0- -0-
Swaptions exercised.................... -0- -0-
--------------- ---------------
Swaptions outstanding at March 31,
2004................................ 36 $ 197,500
--------------- ---------------
3. Swap Agreements
The Portfolio may enter into swaps on sovereign debt obligations to protect
itself from interest rate fluctuations on the underlying debt instruments and
for investment purposes. A swap is an agreement that obligates two parties to
exchange a series of cash flows at specified intervals based upon or calculated
by reference to changes in specified prices or rates for a specified amount of
an underlying asset. The payment flows are usually netted against each other,
with the difference being paid by one party to the other.
Risks may arise as a result of the failure of the counterparty to the swap
contract to comply with the terms of the swap contract. The loss incurred by the
failure of a counterparty is generally limited to the net interest payment to be
received by the Portfolio, and/or the termination value at the end of the
contract. Therefore, the Portfolio considers the creditworthiness of each
counterparty to a swap contract in evaluating potential credit risk.
Additionally, risks may arise from unanticipated movements in interest rates or
in the value of the underlying securities.
The Portfolio records a net receivable or payable on a daily basis for the net
interest income or expense expected to be received or paid during the interest
period. Net interest received or paid on these contracts is recorded as interest
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 25
income (or as an offset to interest income). Fluctuations in the value of swap
contracts are recorded for financial statement purposes as a component of change
in unrealized appreciation/depreciation of investments. Realized gains and
losses from terminated swap contracts are included in net realized gain or loss
on investment transactions.
The Portfolio may enter into credit default swaps. A sell/(buy) in a credit
default swap provides, upon the occurrence of a credit event, as defined in the
swap agreement, for the Portfolio to buy/(sell) from/(to) the counterparty at
par and take/(deliver) the principal amount (the "Notional Amount") of the
referenced obligation. During the term of the swap agreement, the Portfolio
receives/(pays) semi-annual fixed interest payments from/(to) the respective
counterparty, calculated at the agreed upon interest rate applied to the
Notional Amount.
Credit default swaps may involve greater risks than if a Portfolio had invested
in the referenced obligation directly. Credit default swaps are subject to
general market risk, liquidity risk and credit risk. If the Portfolio is a buyer
and no credit event occurs, it will lose its investment. In addition, the value
of the referenced obligation received by the Portfolio as a seller if a credit
event occurs, coupled with the periodic payments previously received, may be
less than the full notional value it pays to the buyer, resulting in a loss of
value to the Portfolio.
4. Reverse Repurchase Agreements
Under a reverse repurchase agreement, the Portfolio sells securities and agrees
to repurchase them at a mutually agreed upon date and price. At the time the
Portfolio enters into a reverse repurchase agreement, it will establish a
segregated account with the custodian containing liquid assets having a value at
least equal to the repurchase price.
For the six months ended March 31, 2004, the average amount of reverse
repurchase agreements outstanding was $88,052,100 and the daily weighted average
annualized interest rate was 1.15%.
NOTE E
Securities Lending
The Portfolio has entered into a securities lending agreement with AG Edwards &
Sons, Inc., (the "Lending Agent"). Under the terms of the agreement, the Lending
Agent, on behalf of the Portfolio, administers the lending of portfolio
securities to certain broker-dealers. In return, the Portfolio receives fee
income from the lending transactions or it retains a portion of interest on the
investment of any cash received as collateral. The Portfolio also continues to
receive dividends or interest on the securities loaned. Unrealized gain or loss
on the value of the securities loaned that may occur during the term of the loan
will be reflected in the accounts of the Portfolio. All loans are continuously
secured by collateral exceeding the value of the securities loaned. All
collateral consists of either cash or U.S. government securities. The Lending
Agent may invest the cash collateral
- --------------------------------------------------------------------------------
26 o AllianceBernstein Bond Fund Corporate Bond Portfolio
received in accordance with the investment restrictions of the Portfolio in one
or more of the following investments: U.S. government or U.S. government agency
obligations, bank obligations, corporate debt obligations, asset-backed
securities, investment funds, structured products, repurchase agreements and an
eligible money market fund. The Lending Agent will indemnify the Portfolio for
any loss resulting from a borrower's failure to return a loaned security when
due. As of March 31, 2004, the Portfolio had loaned securities with a value of
$162,321,164 and received cash collateral which was invested in short-term
securities valued at $167,894,030 as included in the accompanying portfolio of
investments. For the six months ended March 31, 2004, the Portfolio earned fee
income of $97,184 which is included in the accompanying statement of operations.
NOTE F
Capital Stock
There are 15,000,000,000 shares of $.001 par value capital stock authorized,
divided into five classes, designated Class A, Class B, Class C, Class R and
Advisor Class shares. Each class consists of 3,000,000,000 authorized shares.
Transactions in capital stock were as follows:
==================================================
Shares
==================================================
Six Months Ended July 1, 2003 to Year Ended
March 31, 2004 September 30, June 30,
(unaudited) 2003(a) 2003
--------------------------------------------------
Class A
Shares sold 2,095,893 2,299,751 14,552,214
- --------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 835,133 463,442 2,138,633
- --------------------------------------------------------------------------------
Shares converted from Class B 2,541,393 1,013,392 5,513,902
- --------------------------------------------------------------------------------
Shares redeemed (7,336,288) (5,282,724) (24,652,867)
- --------------------------------------------------------------------------------
Net decrease (1,863,869) (1,506,139) (2,448,118)
================================================================================
Class B
Shares sold 1,404,524 1,125,168 6,602,364
- --------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 446,606 272,119 1,355,293
Shares converted to Class A (2,543,006) (1,012,515) (5,511,083)
Shares redeemed (4,488,293) (3,089,416) (10,500,542)
Net decrease (5,180,169) (2,704,644) (8,053,968)
================================================================================
Class C
Shares sold 959,701 610,572 3,130,196
- --------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 163,325 98,457 476,779
Shares redeemed (2,759,082) (1,512,151) (6,386,613)
Net decrease (1,636,056) (803,122) (2,779,638)
================================================================================
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 27
==========================================================
Shares
==========================================================
Six Months Ended July 1, 2003 to August 8, 2002(b)
March 31, 2004 September 30, to June 30,
(unaudited) 2003(a) 2003
----------------------------------------------------------
Advisor Class
Shares sold 82,281 54,241 424,628
- ----------------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 8,416 3,354 5,258
- ----------------------------------------------------------------------------------------
Shares redeemed (11,890) (7,816) (238,961)
- ----------------------------------------------------------------------------------------
Net increase 78,807 49,779 190,925
========================================================================================
November 3,
2003(b) to
March 31, 2004
(unaudited)
--------------
Class R
Shares sold 842
- -------------------------------------------
Net increase 842
===========================================
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
(b) Commencement of distribution.
==================================================
Amount
==================================================
Six Months Ended July 1, 2003 to Year Ended
March 31, 2004 September 30, June 30,
(unaudited) 2003(a) 2003
--------------------------------------------------
Class A
Shares sold $ 32,949,851 $26,935,735 $185,571,781
- --------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 10,145,213 5,434,050 23,617,128
- --------------------------------------------------------------------------------
Shares converted from Class B 23,232,310 11,838,281 36,289,286
- --------------------------------------------------------------------------------
Shares redeemed (88,834,423) (61,727,603) (271,702,238)
- --------------------------------------------------------------------------------
Net decrease $(22,507,049) $(17,519,537) $(26,224,043)
================================================================================
Class B
Shares sold $ 17,011,017 $13,146,628 $ 73,365,336
- --------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 5,416,283 3,188,136 14,932,280
- --------------------------------------------------------------------------------
Shares converted to Class A (23,232,310) (11,838,281) (36,289,286)
- --------------------------------------------------------------------------------
Shares redeemed (61,827,669) (35,980,527) (139,384,003)
- --------------------------------------------------------------------------------
Net decrease $(62,632,679) $(31,484,044) $(87,375,673)
================================================================================
Class C
Shares sold $ 11,606,720 $ 7,136,477 $ 34,950,768
- --------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 1,981,673 1,154,551 5,255,130
- --------------------------------------------------------------------------------
Shares redeemed (33,403,344) (17,610,706) (69,528,339)
- --------------------------------------------------------------------------------
Net decrease $(19,814,951) $(9,319,678) $(29,322,441)
================================================================================
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
28 o AllianceBernstein Bond Fund Corporate Bond Portfolio
=========================================================
Amount
=========================================================
Six Months Ended July 1, 2003 to August 8, 2002(b)
March 31, 2004 September 30, to June 30,
(unaudited) 2003(a) 2003
Advisor Class
Shares sold $ 996,284 $ 634,690 $ 4,825,230
- ---------------------------------------------------------------------------------------
Shares issued in reinvestment of
dividends and distributions 102,395 39,366 60,857
- ---------------------------------------------------------------------------------------
Shares redeemed (143,328) (92,047) (2,743,431)
- ---------------------------------------------------------------------------------------
Net increase $ 955,351 $ 582,009 $ 2,142,656
=======================================================================================
November 3,
2003(b) to
March 31, 2004
(unaudited)
-------------
Class R
Shares sold $ 10,000
- -------------------------------------------
Net increase $ 10,000
===========================================
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
(b) Commencement of distribution.
NOTE G
Joint Credit Facility
A number of open-end mutual funds managed by the Adviser, including the
Portfolio, participate in a $500 million revolving credit facility (the
"Facility") to provide short-term financing if necessary, in connection with
abnormal redemption activity. Commitment fees related to the Facility are paid
by the participating funds and are included in the miscellaneous expenses in the
statement of operations. The Portfolio did not utilize the Facility during the
period ended March 31, 2004.
NOTE H
Risks Involved in Investing in the Portfolio
Interest Rate Risk and Credit Risk--Interest rate risk is the risk that changes
in interest rates will affect the value of the Portfolio's investments in
fixed-income debt securities such as bonds or notes. Increases in interest rates
may cause the value of the Portfolio's investments to decline. Credit risk is
the risk that the issuer or guarantor of a debt security, or the counterparty to
a derivative contract, will be unable or unwilling to make timely principal
and/or interest payments, or to otherwise honor its obligations. The degree of
risk for a particular security may be reflected in its credit risk rating.
Credit risk is greater for medium quality and lower-rated securities.
Lower-rated debt securities and similar unrated securities (commonly known as
"junk bonds") have speculative elements or are predominantly speculative risks.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 29
Concentration of Risk--Investing in securities of foreign companies or foreign
governments involves special risks which include changes in foreign exchange
rates and the possibility of future political and economic developments which
could adversely affect the value of such securities. Moreover, securities of
many foreign companies or foreign governments and their markets may be less
liquid and their prices more volatile than those of comparable United States
companies or of the United States government.
NOTE I
Distributions to Shareholders
The tax character of distributions to be paid for the year ending September 30,
2004 will be determined at the end of the current fiscal year. The tax character
of distributions paid during the fiscal period ended September 30, 2003, and the
fiscal years ended June 30, 2003 and June 30, 2002 were as follows:
September 30, June 30, June 30,
2003 2003 2002
----------- ------------ ---------------
Distributions paid from:
Ordinary income......... $16,023,413 $ 72,565,848 $ 94,986,020
----------- ------------ ---------------
Total taxable distributions 16,023,413 72,565,848 94,986,020
Tax return of capital... -0- 2,529,000 4,267,358
----------- ------------ ---------------
Total distributions paid... $16,023,413 $ 75,094,848 $ 99,253,378(a)
----------- ------------ ---------------
As of March 31, 2004, the components of accumulated earnings/(deficit) on a tax
basis were as follows:
Undistributed ordinary income........................... $ 307,806
Accumulated capital and other losses.................... (364,399,265)(b)
Unrealized appreciation/(depreciation).................. 88,120,468(c)
--------------
Total accumulated earnings/(deficit).................... $ (275,970,991)
--------------
(a) Total distributions paid differ from the statement of changes in net assets
because for tax purposes dividends are recognized when actually paid.
(b) On September 30, 2003, the Fund had a net capital loss carryforward of
$364,399,265 of which $123,146,537 expires in the year 2007, $54,554,000
expires in the year 2008, $52,066,319 expires in the year 2009, and
$134,632,409 expires in the year 2010. To the extent future capital gains
are offset by capital loss carryforwards, such gains will not be
distributed. During the fiscal year, the Fund utilized capital loss
carryforwards of $14,835,029.
(c) The differences between book-basis and tax-basis unrealized
appreciation/(depreciation) are attributable primarily to the tax deferral
of losses on wash sales, the difference between book and tax amortization
methods for premium and the realization for tax purposes of gains/losses on
certain derivative instruments.
During the current fiscal year, permanent differences, primarily due to the tax
treatment of bond premium, resulted in a net decrease in distributions in excess
of net investment income and an increase in accumulated net realized loss on
investment transactions. This reclassification had no effect on net assets.
- --------------------------------------------------------------------------------
30 o AllianceBernstein Bond Fund Corporate Bond Portfolio
NOTE J
Legal Proceedings
As has been previously reported in the press, the Staff of the U.S. Securities
and Exchange Commission ("SEC") and the NYAG have been investigating practices
in the mutual fund industry identified as "market timing" and "late trading" of
mutual fund shares. Certain other regulatory authorities have also been
conducting investigations into these practices within the industry and have
requested that Alliance Capital Management L.P. ("Alliance Capital"), the Fund's
Adviser, provide information to them. Alliance Capital has been cooperating and
will continue to cooperate with all of these authorities.
On December 18, 2003, Alliance Capital confirmed that it had reached terms with
the SEC and the NYAG for the resolution of regulatory claims relating to the
practice of "market timing" mutual fund shares in some of the AllianceBernstein
Mutual Funds. The agreement with the SEC is reflected in an Order of the
Commission ("SEC Order"). The agreement with the NYAG is subject to final,
definitive documentation. Among the key provisions of these agreements are the
following:
(i) Alliance Capital agreed to establish a $250 million fund (the
"Reimbursement Fund") to compensate mutual fund shareholders for the
adverse effects of market timing attributable to market timing
relationships described in the SEC Order. According to the SEC Order,
the Reimbursement Fund is to be paid, in order of priority, to fund
investors based on (i) their aliquot share of losses suffered by the
fund due to market timing, and (ii) a proportionate share of advisory
fees paid by such fund during the period of such market timing;
(ii) Alliance Capital agreed to reduce the advisory fees it receives from
some of the AllianceBernstein long-term, open-end retail funds,
commencing January 1, 2004, for a period of at least five years. The
determination of which funds will have their fees reduced and to what
degree is subject to the terms of the definitive agreement with the
NYAG; and
(iii) Alliance Capital agreed to implement changes to its governance and
compliance procedures. Additionally, the SEC Order contemplates that
Alliance Capital's registered investment company clients, including
the Fund, will introduce governance and compliance changes.
In anticipation of final, definitive documentation and effective January 1,
2004, the Adviser began waiving a portion of its advisory fee. For a more
complete description of this waiver, please see "Advisory Fee and Other
Transactions with Affiliates" above.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 31
The special committee of Alliance Capital's Board of Directors, comprised of the
members of Alliance Capital's Audit Committee and the other independent member
of the Board, is continuing to direct and oversee an internal investigation and
a comprehensive review of the facts and circumstances relevant to the SEC's and
the NYAG's investigations.
In addition, the Independent Directors of the Fund ("the Independent Directors")
have initiated an investigation of the above-mentioned matters with the advice
of an independent economic consultant and independent counsel. The Independent
Directors have formed a special committee to supervise the investigation.
On October 2, 2003, a putative class action complaint entitled Hindo et al. v.
AllianceBernstein Growth & Income Fund et al. (the "Hindo Complaint") was filed
against Alliance Capital; Alliance Capital Management Holding L.P.; Alliance
Capital Management Corporation; AXA Financial, Inc.; certain of the
AllianceBernstein Mutual Funds, including the Fund; Gerald Malone; Charles
Schaffran (collectively, the "Alliance Capital defendants"); and certain other
defendants not affiliated with Alliance Capital. The Hindo Complaint was filed
in the United States District Court for the Southern District of New York by
alleged shareholders of two of the AllianceBernstein Mutual Funds. The Hindo
Complaint alleges that certain of the Alliance Capital defendants failed to
disclose that they improperly allowed certain hedge funds and other unidentified
parties to engage in late trading and market timing of AllianceBernstein Fund
securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b)
and 20(a) of the Exchange Act, and Sections 206 and 215 of the Advisers Act.
Plaintiffs seek an unspecified amount of compensatory damages and rescission of
their contracts with Alliance Capital, including recovery of all fees paid to
Alliance Capital pursuant to such contracts.
Since October 2, 2003, numerous additional lawsuits making factual allegations
similar to those in the Hindo Complaint were filed against Alliance Capital and
certain other defendants, some of which name the Fund as a defendant. All of
these lawsuits seek an unspecified amount of damages.
As a result of the matters discussed above, investors in the AllianceBernstein
Mutual Funds may choose to redeem their investments. This may require the
AllianceBernstein Mutual Funds to sell investments held by those funds to
provide for sufficient liquidity and could also have an adverse effect on the
investment performance of the AllianceBernstein Mutual Funds.
- --------------------------------------------------------------------------------
32 o AllianceBernstein Bond Fund Corporate Bond Portfolio
FINANCIAL HIGHLIGHTS
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
=======================================================================================
Class A
=======================================================================================
Six Months
Ended July 1,
March 31, 2003 to Year Ended June 30,
2004 September -----------------------------------------------------------
(unaudited) 30, 2003(a) 2003 2002(b) 2001 2000 1999
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period ........ $11.97 $12.03 $10.70 $12.29 $11.91 $12.49 $14.19
-----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment
income(c)................... .37(d) .18 .77 .94 .97 1.04 1.06
Net realized and
unrealized gain (loss)
on investment
transactions................ .30 (.06) 1.35 (1.55) .42 (.55) (1.64)
-----------------------------------------------------------------------------------------
Net increase (decrease)
in net asset value
from operations............. .67 .12 2.12 (.61) 1.39 .49 (.58)
-----------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income........... (.36) (.18) (.76) (.94) (.97) (1.04) (1.07)
Distributions in excess
of net investment
income...................... -0- -0- -0- -0- (.01) -0- (.01)
Tax return of capital ......... -0- -0- (.03) (.04) (.03) (.03) (.04)
-----------------------------------------------------------------------------------------
Total dividends and
distributions............... (.36) (.18) (.79) (.98) (1.01) (1.07) (1.12)
-----------------------------------------------------------------------------------------
Net asset value,
end of period............... $12.28 $11.97 $12.03 $10.70 $12.29 $11.91 $12.49
=========================================================================================
Total Return
Total investment return
based on net asset
value(e).................... 5.62% 1.06% 20.75% (5.51)% 12.03% 4.11% (4.08)%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted)............. $526,360 $535,318 $555,979 $520,984 $530,446 $473,578 $476,141
Ratio to average
net assets of:
Expenses,
net of waivers/
reimbursements............ 1.21%(f) 1.20%(f) 1.16% 1.12% 1.31% 1.12% 1.11%
Expenses,
before waivers/
reimbursements............ 1.24%(f) 1.20%(f) 1.16% 1.12% 1.31% 1.12% 1.11%
Expenses,
before waivers/
reimbursements,
excluding interest
expense................... 1.14%(f) 1.15%(f) 1.13% 1.09% 1.09% 1.11% 1.11%
Net investment
income.................... 6.15%(d)(f) 6.18%(f) 6.96% 7.79% 7.95% 8.51% 8.13%
Portfolio turnover rate ....... 65% 65% 171% 276% 340% 302% 281%
See footnote summary on page 37.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 33
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
=======================================================================================
Class B
=======================================================================================
Six Months
Ended July 1,
March 31, 2003 to Year Ended June 30,
2004 September -----------------------------------------------------------
(unaudited) 30, 2003(a) 2003 2002(b) 2001 2000 1999
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period ........ $11.96 $12.02 $10.70 $12.30 $11.92 $12.49 $14.19
-----------------------------------------------------------------------------------------
Income From Investment
Operations
Net investment
income(c).................... .33(d) .16 .69 .85 .88 .95 .97
Net realized and
unrealized gain (loss)
on investment
transactions................ .29 (.06) 1.35 (1.55) .42 (.54) (1.64)
-----------------------------------------------------------------------------------------
Net increase (decrease)
in net asset value from
operations.................. .62 .10 2.04 (.70) 1.30 .41 (.67)
-----------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income........... (.31) (.16) (.70) (.85) (.88) (.95) (.98)
Distributions in excess
of net investment
income...................... -0- -0- -0- (.01) (.01) -0- (.01)
Tax return of capital ......... -0- -0- (.02) (.04) (.03) (.03) (.04)
-----------------------------------------------------------------------------------------
Total dividends and
distributions............... (.31) (.16) (.72) (.90) (.92) (.98) (1.03)
-----------------------------------------------------------------------------------------
Net asset value,
end of period............... $12.27 $11.96 $12.02 $10.70 $12.30 $11.92 $12.49
=========================================================================================
Total Return
Total investment return
based on net asset
value(e).................... 5.26% .88% 19.85% (6.23)% 11.24% 3.39% (4.77)%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted)............. $330,175 $383,763 $418,095 $458,394 $509,953 $477,259 $630,631
Ratio to average
net assets of:
Expenses,
net of waivers/
reimbursements............ 1.93%(f) 1.92%(f) 1.88% 1.83% 2.03% 1.83% 1.82%
Expenses,
before waivers/
reimbursements............ 1.96%(f) 1.92%(f) 1.88% 1.83% 2.03% 1.83% 1.82%
Expenses,
before waivers/
reimbursements,
excluding interest
expense................... 1.86%(f) 1.87%(f) 1.85% 1.80% 1.81% 1.83% 1.82%
Net investment
income.................... 5.45%(d)(f) 5.48%(f) 6.27% 7.05% 7.18% 7.77% 7.41%
Portfolio turnover rate ....... 65% 65% 171% 276% 340% 302% 281%
See footnote summary on page 37.
- --------------------------------------------------------------------------------
34 o AllianceBernstein Bond Fund Corporate Bond Portfolio
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
=======================================================================================
Class C
=======================================================================================
Six Months
Ended July 1,
March 31, 2003 to Year Ended June 30,
2004 September -----------------------------------------------------------
(unaudited) 30, 2003(a) 2003 2002(b) 2001 2000 1999
-----------------------------------------------------------------------------------------
Net asset value,
beginning of period ........ $11.96 $12.02 $10.70 $12.30 $11.91 $12.49 $14.19
Income From Investment
Operations
Net investment
income(c)................... .33(d) .16 .69 .85 .89 .94 .97
Net realized and
unrealized gain (loss)
on investment
transactions................ .30 (.06) 1.35 (1.55) .42 (.54) (1.64)
-----------------------------------------------------------------------------------------
Net increase (decrease)
in net asset value
from operations............. .63 .10 2.04 (.70) 1.31 .40 (.67)
-----------------------------------------------------------------------------------------
Less: Dividends and
Distributions
Dividends from net
investment income........... (.31) (.16) (.70) (.85) (.89) (.95) (.98)
Distributions in excess
of net investment
income...................... -0- -0- -0- (.01) -0- -0- (.01)
Tax return of capital ......... -0- -0- (.02) (.04) (.03) (.03) (.04)
-----------------------------------------------------------------------------------------
Total dividends and
distributions............... (.31) (.16) (.72) (.90) (.92) (.98) (1.03)
-----------------------------------------------------------------------------------------
Net asset value,
end of period............... $12.28 $11.96 $12.02 $10.70 $12.30 $11.91 $12.49
=========================================================================================
Total Return
Total investment return
based on net asset
value(e).................... 5.34% .88% 19.85% (6.23)% 11.33% 3.30% (4.77)%
Ratios/Supplemental
Data
Net assets, end of period
(000's omitted)............. $141,741 $157,719 $168,123 $179,418 $185,022 $176,814 $204,271
Ratio to average
net assets of:
Expenses,
net of waivers/
reimbursements............ 1.92%(f) 1.91%(f) 1.87% 1.82% 2.03% 1.83% 1.81%
Expenses,
before waivers/
reimbursements............ 1.95%(f) 1.91%(f) 1.87% 1.82% 2.03% 1.83% 1.81%
Expenses,
before waivers/
reimbursements,
excluding interest
expense................... 1.85%(f) 1.86%(f) 1.84% 1.79% 1.81% 1.82% 1.81%
Net investment
income.................... 5.47%(d)(f) 5.49%(f) 6.28% 7.07% 7.22% 7.75% 7.37%
Portfolio turnover rate ....... 65% 65% 171% 276% 340% 302% 281%
See footnote summary on page 37.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 35
Selected Data For A Share Of Capital Stock Outstanding Throughout The Period
==============
Class R
==============
November 3,
2003(g) to
March 31,
2004
(unaudited)
--------------
Net asset value, beginning of period............................ $11.88
--------------
Income From Investment Operations
Net investment income(d)........................................ .30
Net realized and unrealized gain on investment transactions..... .38
--------------
Net increase in net asset value from operations................. .68
--------------
Less: Dividends
Dividends from net investment income............................ (.28)
--------------
Total dividends................................................. (.28)
--------------
Net asset value, end of period.................................. $12.28
==============
Total Return
Total investment return based on net asset value(e)............. 5.76%
Ratios/Supplemental Data
Net assets, end of period (000's omitted)....................... $10
Ratio to average net assets of:
Expenses, net of waivers/reimbursements(f).................... 1.37%
Expenses, before waivers/reimbursements(f).................... 1.41%
Expenses, before waivers/reimbursements,
excluding interest expense(f) .............................. 1.31%
Net investment income(d)(f) .................................. 5.99%
Portfolio turnover rate......................................... 65%
See footnote summary on page 37.
- --------------------------------------------------------------------------------
36 o AllianceBernstein Bond Fund Corporate Bond Portfolio
Selected Data For A Share Of Capital Stock Outstanding Throughout Each Period
=========================================
Advisor Class
=========================================
Six Months
Ended July 1, August 8,
March 31, 2003 to, 2002(g) to
2004 September June 30,
(unaudited) 30, 2003(a) 2003
------------------------------------------
Net asset value, beginning of period....... $ 11.98 $ 12.03 $ 10.21
------------------------------------------
Income From Investment Operations
Net investment income(c)................... .39(d) .19 .69
Net realized and unrealized gain (loss)
on investment transactions.............. .29 (.05) 1.85
------------------------------------------
Net increase in net asset value from
operations ............................. .68 .14 2.54
------------------------------------------
Less: Dividends and Distributions
Dividends from net investment income....... (.37) (.19) (.70)
Tax return of capital...................... -0- -0- (.02)
------------------------------------------
Total dividends and distributions.......... (.37) (.19) (.72)
------------------------------------------
Net asset value, end of period ............ $12.29 $11.98 $12.03
==========================================
Total Return
Total investment return based on net
asset value(e) ......................... 5.78% 1.22% 25.70%
Ratios/Supplemental Data
Net assets, end of period
(000's omitted)......................... $3,927 $2,883 $2,298
Ratio to average net assets of:
Expenses, net of
waivers/reimbursements(f) ............ .91% .91% .88%
Expenses, before
waivers/reimbursements(f) ............ .94% .91% .88%
Expenses, before
waivers/reimbursements,
excluding interest expense(f)......... .84% .86% .85%
Net investment income(f)................. 6.47%(d) 6.51% 6.90%
Portfolio turnover rate.................... 65% 65% 171%
(a) The Portfolio changed its fiscal year end from June 30 to September 30.
(b) As required, effective July 1, 2001, the Portfolio has adopted the
provisions of the AICPA Audit and Accounting Guide, Audits of Investment
Companies, and began amortizing premium on debt securities for financial
statement reporting purposes only. The effect of this change for the year
ended June 30, 2002, was to decrease net investment income per share and net
realized and unrealized loss on investments per share by less than $.01 for
Class A, Class B and Class C, respectively, and decrease the ratio of net
investment income to average net assets from 7.82% to 7.79% for Class A,
from 7.08% to 7.05% for Class B and from 7.10% to 7.07% for Class C. Per
share, ratios and supplemental data for periods prior to July 1, 2001 have
not been restated to reflect this change in presentation.
(c) Based on average shares outstanding.
(d) Net of expenses waived and reimbursed by the Adviser.
(e) Total investment return is calculated assuming an initial investment is made
at the net asset value at the beginning of the period, reinvestment of all
dividends and distributions at net asset value during the period, and
redemption on the last day of the period. Initial sales charges or
contingent deferred sales charges are not reflected in the calculation of
total investment return. Total investment return does not reflect the
deduction of taxes that a shareholder would pay on Portfolio distributions
or the redemption of Portfolio shares. Total investment return calculated
for a period of less than one year is not annualized.
(f) Annualized.
(g) Commencement of distribution.
- -------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 37
BOARD OF DIRECTORS
William H. Foulk, Jr.(1), Chairman
Marc O. Mayer, President
Ruth Block(1)
David H. Dievler(1)
John H. Dobkin(1)
Clifford L. Michel(1)
Donald J. Robinson(1)
OFFICERS
Jeffrey S. Phlegar, Vice President
Lawrence J. Shaw(2), Vice President
Michael A. Snyder(2), Vice President
Mark R. Manley, Secretary
Mark D. Gersten, Treasurer & Chief Financial Officer
Vincent S. Noto, Controller
Custodian
State Street Bank & Trust Company
225 Franklin Street
Boston, MA 02110
Principal Underwriter
AllianceBernstein Investment
Research and Management, Inc.
1345 Avenue of the Americas
New York, NY 10105
Transfer Agent
Alliance Global Investor Services, Inc.
P.O. Box 786003
San Antonio, TX 78278-6003
Toll-Free (800) 221-5672
Independent Auditors
Ernst & Young LLP
5 Times Square
New York, NY 10036
Legal Counsel
Seward & Kissel LLP
One Battery Park Plaza
New York, NY 10004
(1) Member of the Audit Committee.
(2) Messrs. Shaw and Snyder are the persons primarily responsible for the
day-to-day management of the Portfolio's investment portfolio.
- --------------------------------------------------------------------------------
38 o AllianceBernstein Bond Fund Corporate Bond Portfolio
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN FAMILY OF FUNDS
================================================================================
Wealth Strategies Funds
Balanced Wealth Strategy
Wealth Appreciation Strategy
Wealth Preservation Strategy
Tax-Managed Balanced Wealth Strategy*
Tax-Managed Wealth Appreciation Strategy
Tax-Managed Wealth Preservation Strategy**
================================================================================
Blended Style Funds
U.S. Large Cap Portfolio
International Portfolio
Tax-Managed International Portfolio
================================================================================
Growth Funds
Domestic
Growth Fund
Health Care Fund
Mid-Cap Growth Fund
Premier Growth Fund
Small Cap Growth Fund
Technology Fund
Global & International
All-Asia Investment Fund
Global Research Growth Fund
Global Small Cap Fund
Greater China '97 Fund
International Premier Growth Fund
New Europe Fund
Worldwide Privatization Fund
Select Investor Series
Biotechnology Portfolio
Premier Portfolio
Technology Portfolio
================================================================================
Value Funds
Domestic
Balanced Shares
Disciplined Value Fund
Growth & Income Fund
Real Estate Investment Fund
Small CapValue Fund
Utility Income Fund
Value Fund
Global & International
Global Value Fund
International Value Fund
================================================================================
Taxable Bond Funds
Americas Government Income Trust
Corporate Bond Portfolio
Emerging Market Debt Fund
Global Strategic Income Trust
High Yield Fund
Multi-Market Strategy Trust
Quality Bond Portfolio
Short Duration Portfolio
U.S. Government Portfolio
================================================================================
Municipal Bond Funds
National
Insured National
Arizona
California
Insured California
Florida
Massachusetts
Michigan
Minnesota
New Jersey
New York
Ohio
Pennsylvania
Virginia
================================================================================
Intermediate Municipal Bond Funds
Intermediate California
Intermediate Diversified
Intermediate New York
================================================================================
Closed-End Funds
All-Market Advantage Fund
ACM Income Fund
ACM Government Opportunity Fund
ACM Managed Dollar Income Fund
ACM Managed Income Fund
ACM Municipal Securities Income Fund
California Municipal Income Fund
National Municipal Income Fund
New York Municipal Income Fund
The Spain Fund
World Dollar Government Fund
World Dollar Government Fund II
- --------------------------------------------------------------------------------
We also offer Exchange Reserves,41 which serves as the money market fund
exchange vehicle for the AllianceBernstein mutual funds.
For more complete information on any AllianceBernstein mutual fund, including
investment objectives and policies, sales charges, expenses, risks and other
matters of importance to prospective investors, visit our web site at
www.alliancebernstein.com or call us at (800) 227-4618 for a current prospectus.
Please read the prospectus carefully before you invest or send money.
* Formerly Growth Investors Fund.
** Formerly Conservative Investors Fund.
+ An investment in the Fund is not a deposit in a bank and is not insured or
guaranteed by the Federal Deposit Insurance Corporation or any other
government agency. Although the Fund seeks to preserve the value of your
investment at $1.00 per share, it is possible to lose money by investing in
the Fund.
- --------------------------------------------------------------------------------
AllianceBernstein Bond Fund Corporate Bond Portfolio o 39
NOTES
- --------------------------------------------------------------------------------
40 o AllianceBernstein Bond Fund Corporate Bond Portfolio
- --------------------------------------------------------------------------------
ALLIANCEBERNSTEIN BOND Fund Corporate Bond PORTFOLIO
1345 Avenue of the Americas
New York, NY 10105
(800) 221-5672
[LOGO] AllianceBernstein(SM)
Investment Research and Management
(SM) This service mark used under license from the owner, Alliance Capital
Management L.P.
CBPSR0304
ITEM 2. CODE OF ETHICS.
Not applicable when filing a Semi-Annual report to shareholders.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT.
Not applicable when filing a Semi-Annual report to shareholders.
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
Not applicable when filing a Semi-Annual report to shareholders.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS.
Not applicable to the registrant.
ITEM 6. [RESERVED]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES.
Not applicable to the registrant.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable to the registrant.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On March 17, 2004 the Fund adopted procedures effective April 1, 2004, by which
shareholders may recommend nominees to the Fund's Board of Directors. Prior
thereto, the Fund's Board did not accept shareholder recommendations for
nominees to the Fund's Board.
ITEM 10. CONTROLS AND PROCEDURES.
(a) The registrant's principal executive officer and principal financial officer
have concluded that the registrant's disclosure controls and procedures (as
defined in Rule 30a-2(c) under the Investment Company Act of 1940, as amended)
are effective at the reasonable assurance level based on their evaluation of
these controls and procedures as of a date within 90 days of the filing date of
this document.
(b) There were no significant changes in the registrant's internal controls that
could significantly affect these controls subsequent to the date of their
evaluation, including any corrective actions with regard to significant
deficiencies and material weaknesses.
ITEM 11. EXHIBITS.
The following exhibits are attached to this Form N-CSR:
Exhibit No. DESCRIPTION OF EXHIBIT
----------- ----------------------
11 (b) (1) Certification of Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
11 (b) (2) Certification of Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
11 (c) Certification of Principal Executive Officer and Principal
Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant): AllianceBernstein Bond Fund, Inc.
By: /s/Marc O. Mayer
--------------------------------
Marc O. Mayer
President
Date: June 7, 2004
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By: /s/Marc O. Mayer
--------------------------------
Marc O. Mayer
President
Date: June 7, 2004
By: /s/Mark D. Gersten
-------------------------------
Mark D. Gersten
Treasurer and Chief Financial Officer
Date: June 7, 2004